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International Monetary Fund. Strategy, Policy, & Review Department
The coverage of risks has become more systematic since the Global Financial Crisis (GFC): staff reports now regularly identify major risks and provide an assessment of their likelihood and economic impact, summarized in Risk Assessment Matrices (RAM). But still limited attention is paid to the range of possible outcomes. Also, risk identification is useful only so much as to inform policy design to preemptively respond to relevant risks and/or better prepare for them. In this regard, policy recommendations in surveillance could be richer in considering various risk management approaches. To this end, progress is needed on two dimensions: • Increasing emphasis on the range of potential outcomes to improve policy design. • Encouraging more proactive policy advice on how to manage risks. Efforts should continue to leverage internal and external resources to support risk analysis and advice in surveillance.
International Monetary Fund. Strategy, Policy, & Review Department

various risk management policies and tools. Fund surveillance should provide a meaningful analysis of alternative policy options, aiming to deliver a baseline policy advice that is robust to risks and, where relevant, contingency plans if risks were to already materialize (both calibrated to country-specific circumstances). Efforts should continue to leverage internal and external resources to support risk analysis and advice in surveillance. This includes strengthening the engagement with outside experts and—with the growing relevance of non-economic risks

International Monetary Fund. Western Hemisphere Dept.

projects, and new spillovers from the Odebrecht investigation. There is some upside potential in the medium term, however, if reforms are implemented faster, or commodity prices are higher, than in the baseline. Policy Advice . In the context of domestic headwinds and challenging external conditions, a combination of countercyclical policies and structural reforms is appropriate. In the short term, agile fiscal and monetary policies will help the economy tackle reconstruction needs, while preserving Peru’s strong fiscal and inflation anchors. Structural reforms

International Monetary Fund. Strategy, Policy, & Review Department

economic diversification and enhancing market flexibility), inter-temporal trade-offs (e.g., by providing immediate support to economic activity at the cost of a buildup of more uncertain longer-term risks), and tradeoffs between reducing negative risks and enhancing opportunities (e.g., by investing in disaster-proof infrastructure at the cost of forgoing investment in bandwidth infrastructure and widening the digital divide). Such a meaningful analysis of alternative policy options should make the baseline policy advice more robust to risks and, where relevant, help

International Monetary Fund. Strategy, Policy, & Review Department

along several dimensions (see “CSR 2021—Background Paper on the Surveillance Priority Confronting Risks and Uncertainties” for further details, IMF 2021b ): Increasing emphasis on the range of potential outcomes. Country teams should be encouraged to pay greater attention to possibilities beyond the baseline, including low-probability high-impact risks. This could be supported by greater use of analytical tools (old and new) to better quantify risks, as well as scenario analysis to assess the robustness of baseline policy advice. Collaboration with outside

International Monetary Fund. Strategy, Policy, & Review Department
Fund surveillance needs to evolve to face the economic and financial challenges that will shape the global landscape for years to come. This paper first takes stock of the current economic and financial landscape. To better serve the membership in this context, Fund surveillance should be prioritized around four key priorities: (i) confronting risks and uncertainties: policymakers will need to actively manage the risks of a highly uncertain outlook; (ii) preempting and mitigating adverse spillovers: shifting patterns of global economic integration will bring about new channels for contagion and policy spillovers; (iii) fostering economic sustainability: a broader understanding of sustainability to better account for the impact of economic and non-economic developments on stability; and (iv) unified policy advice: better accounting for the trade-offs and synergies among different policy combinations in the face of limited policy space and overlapping priorities, tailored to country-specific circumstances. These priorities should further enhance the traction of Fund surveillance.
International Monetary Fund
This 2012 Article IV Consultation focuses on Italy’s economy, which is expected to continue contracting through the year owing to tight financial conditions, global slowdown, and the needed fiscal consolidation. The government has embarked on wide-ranging structural reforms to boost productivity and potential growth. Executive Directors have commended the Italian authorities for launching an ambitious policy agenda to secure fiscal sustainability and promote growth. Directors have also acknowledged the important steps taken toward deregulating the service sector and making the labor market more flexible and inclusive.
International Monetary Fund. Western Hemisphere Dept.
This 2017 Article IV Consultation highlights Peru’s average growth of more than 5.25 percent since 2000, which has led to significantly reduced unemployment and poverty. Inflation is in low single digits, the fiscal position has strengthened, and dollarization has declined markedly. Growth is expected to remain high relative to the region. In particular, GDP growth is projected to slow to about 2.7 percent in 2017, before bouncing back to over 3.75 percent in 2018, as reconstruction spending filters through the economy and projects delayed owing to the Odebrecht scandal start to catch up. Inflation should gradually return to the target range as weather-related factors abate and food price inflation declines.
International Monetary Fund. Strategy, Policy, & Review Department

judgment of country teams, informed by consistent, cross-country quantitative models and country-specific contexts. 32. Staff is encouraged to discuss trade-offs, aiming for policies robust to a range of possible outcomes. Considering a range of quantified scenarios (rather than overly focusing on the baseline) will help make baseline policy advice more robust to risks and encourage a mindset of internalizing risks in policy design. Policy discussions should cover both downside and upside risks (e.g., fiscal and monetary policy advice in response to stronger

International Monetary Fund. Strategy, Policy, & Review Department
This Guidance Note provides guidance to country teams for surveillance under Article IV consultations. It supersedes the 2015 Guidance Note and its supplement. Fund surveillance continuously adapts to the evolving economic and financial landscape. The 2021 Comprehensive Surveillance Review (CSR) identified priorities for Fund surveillance, both in terms of content and modalities. This Guidance Note covers: Scope and requirements: The note lays out the coverage of, and formal requirements for, Article IV consultations and staff reports. It also outlines best practices aimed at enhancing the traction of Fund analysis and policy advice. Priorities and focus. The note reflects the four surveillance priorities identified in the CSR: (i) confronting risks and uncertainties, (ii) preempting and mitigating spillovers, (iii) ensuring economic sustainability, and (iv) adopting a more unified approach to policy advice. The note also provides guidance on sharpening the focus and selectivity of Article IV staff reports. Policies. The note discusses the content of surveillance in the areas of fiscal policy, macrofinancial analysis and financial policies, monetary policy, external sector policies, and macrostructural policies. Applications. The note considers several applications of such policies, such as with respect to the Integrated Policy Framework, climate change, and gender. Process and procedures. The note describes the Article IV consultation cycle and process, lays out drafting and publication guidelines for staff reports, and covers the treatment of confidential information.